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The Black Swan – Nassim Nicolas Taleb
By Bully The Bear  •  July 1, 2008
By: La Papillion I have fond memories of this author – one of my favourites among the books I’ve read. I was hooked by his style of skeptical empiricism when I was introduced to his first book – ‘Fooled by Randomness’ – by serependity. The author will be glad that it is through a series of black swan event that lead me to his first book, and consequently, to his second book. Long time ago, my gf went to US for a conference on a paper she submitted. Man, in these conferences, there are people literally giving out books for free (to be fair, they did try to sell during the first few days of the conference, but towards the last day, book hell went loose). My gf, a typical free-must-grab Singaporean, grabbed a few of the books, regardless of race, language or religion (ok, I exaggerate). Among the horde of books, one of them is Nassim Nicolas Taleb’s ’Fooled by randomness’. Talk about Black swan events (these are incalculable, low probabilistic and highly consequential events), my introduction to the author’s first book must fall squarely into such category. The author’s style is very refreshing, a logical salad mixed with lots of stories woven with facts, creating a potent mix of philosophical brouhaha. Black swans are named as such because of this story. Imagine all throughout your life, you only saw swans which are white. Based on historical past, you can ‘extrapolate’ your data by induction that all swans are white. This is all jolly well and good until one day you saw your first black swan. This event totally tears away your hypothesis that all swans are white and is something that the past data can never predict. The probability of meeting a black swan is not calculable, though based on the past data it has a very low probability (which explains why you didn’t see one earlier) and has serious consequences. Here, ‘absence of evidence’ is misconstrued as ‘evidence of absence’. Are we similarly fooled by such logic errors? I can think of a few: Read more...
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By Bully The Bear
La papillion is french for butterfly. This blog chronicles my journey from an amateur in the stock market to where I am today. Have I turned into a beautiful butterfly? I don't know, but I think my metamorphosis is still on-going now :)
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2 Comments

2 responses to “The Black Swan – Nassim Nicolas Taleb”

  1. Panzer says:

    Hi Derek

    There’s some HTML error, the link to “Read More” doesn’t work. ;-)

    BTW, I’ve finished the 9 parter on my review of “Your Money or Your Life” by Joe Dominguez and Vicki Robin.

    Part 1 starts here:

    http://fivecentstencents.com/2008/05/28/your-money-or-your-life-panzers-book-review-part-1/

    If you would feature it in thefinance.sg it would be a blast!

    Be well and prosper.

  2. Derek Lim says:

    Hi Panzer,

    Thanks for highlighting. I have made the correction.

    I will be posting “Your Money or Your Life” this weekend. One chapter per week. Btw, I have posted your article “Are you ready for retirement?”

    Cheers!

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